Correlation Between Standex International and Richtech Robotics
Can any of the company-specific risk be diversified away by investing in both Standex International and Richtech Robotics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Standex International and Richtech Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standex International and Richtech Robotics Class, you can compare the effects of market volatilities on Standex International and Richtech Robotics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Standex International with a short position of Richtech Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standex International and Richtech Robotics.
Diversification Opportunities for Standex International and Richtech Robotics
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Standex and Richtech is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Standex International and Richtech Robotics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richtech Robotics Class and Standex International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Standex International are associated (or correlated) with Richtech Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richtech Robotics Class has no effect on the direction of Standex International i.e., Standex International and Richtech Robotics go up and down completely randomly.
Pair Corralation between Standex International and Richtech Robotics
Considering the 90-day investment horizon Standex International is expected to generate 0.17 times more return on investment than Richtech Robotics. However, Standex International is 5.82 times less risky than Richtech Robotics. It trades about 0.1 of its potential returns per unit of risk. Richtech Robotics Class is currently generating about 0.0 per unit of risk. If you would invest 13,289 in Standex International on August 26, 2024 and sell it today you would earn a total of 7,173 from holding Standex International or generate 53.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standex International vs. Richtech Robotics Class
Performance |
| Timeline |
| Standex International |
| Richtech Robotics Class |
Standex International and Richtech Robotics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standex International and Richtech Robotics
The main advantage of trading using opposite Standex International and Richtech Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standex International position performs unexpectedly, Richtech Robotics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Richtech Robotics will offset losses from the drop in Richtech Robotics' long position.The idea behind Standex International and Richtech Robotics Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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